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LE 8: Application of imputation ratio
or “How imputation credits are limited when a dividend's ratio exceeds the maximum”
You could also call this:

“Tax credits for dividends from certain foreign investments”

You can get a tax credit for certain types of foreign investments. This applies when you have income that includes an imputation credit because of a specific rule (section LE 1(4B)).

Your tax credit is limited to the smaller of two amounts: the imputation credit itself, or the result of a calculation. This calculation multiplies two things:

  1. The imputation ratio (which is explained in another part of the law)
  2. Your FIF income (Foreign Investment Fund income) for the year you received the imputation credit

The FIF income used in this calculation only includes income from the specific investment that gave you the imputation credit.

Remember, an imputation credit is like a pre-payment of tax that comes with some types of income. The FIF income is money you earn from certain foreign investments.

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Next up: LE 9: Application of combined imputation and FDP ratio

or “This provision about tax credits was removed in 2017”
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Part L Tax credits and other credits
Tax credits for imputation credits

LE 8BDividends from certain FIF interests

  1. This section applies when a person has assessable income for the purposes of section LE 1 because section LE 1(4B) applies (the LE 1(4B) income), and the LE 1(4B) income includes an imputation credit.

  2. The person's tax credit for the imputation credit is limited to the lesser of the imputation credit and the following amount:

    imputation ratio × FIF income.

    Where:

    • In the formula,—

    • imputation ratio is the imputation ratio referred to in section OB 60 (Imputation credits attached to dividends) if the relevant amount of LE 1(4B) income is treated as a dividend, and the imputation credit is attached to it.
      1. FIF income is the person's FIF income for the income year in which the imputation credit is received, to the extent to which the FIF income is for the attributing interest for which the imputation credit is received.

        Notes
        • Section LE 8B: inserted, on , by section 104 of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).